As the title says - why is LH so successful? I keep hearing all the time about the airline making huge profits, and in today's aviation climate with rising fuel prices and competition from LCCs that really is an accomplishment. I recently flew LH from BGO to MAD and back via FRA, and was even served a HOT pasta meal, cookies and unlimited drinks on the 2 hours 20 minute flight from MAD to FRA. WIth all other airlines seemingly resorting to cut-backs in service and frills, how is LH able to do this? Surely the labor costs in Germany must be at about the same level as in any other Western country, and from what I understand most airlines in other Western countries are going through very tough times right now.

Would appreciate some thoughts from someone more versed in aviation business than myself

Quoting TUNisia (Reply 1):Swiss is the most profitable part of the Lufthansa group.

yeah well your comment was just great and answered his question fully, I guess

Anyway, I can't really answer your question but I can tell you that labour costs are pretty high in Germany. Also, LH is pretty good in hedging fuel risks in the last year so they can offset the higher fuel prices a little bit.

Regds
jush

There is one problem with airbus. Though their products are engineering marvels they lack passion, completely.

- Reasonable pricing. While ticket prices are often competitive, they never become "insane" as with other carriers. LH typically tries to compete by providing quality instead of the lowest price.
- Do not underestimate the advantage they have by being the largest and only comprehensive German-language carrier. This is certainly a factor in the travel planning of many Germans, who may not feel comfortable using an airline which does not (or only partially) provide German-language service.
- They do not waste money on nonsense like rebranding and/or repainting their fleet every two years, or on installing the latest gadgets such as (often non-functioning) AVOD IFEs, onboard satellite TV etc. They focus on providing a good core travel experience, and passengers appreciate this.
- Nice little services and amenities like free newspapers and coffee at their gates and even on short flights, free beverages and (often even hot) meals on most flights. This adds to a pleasant overall experience.
- They have a reputation for being reliable and punctual, and their staff is typically professional and friendly.
- They are organized well, with two big, efficient international hubs at FRA and MUC. Their fleet planning also seems reasonable.
- LH group is large and includes such activities as LH Technik for maintenance and their own in-house IT development. This contributes to the overall result.

You could also talk about how they are the flag international carrier for the largest and most prosperous economy in Europe. A country which is also an high value export powerhouse that needs to send executives on long-haul trips and can afford to pay premium fares while doing so. They then piggy back on their base by picking-off high paying passengers from near-by countries who they get to connect in FRA and MUC. They also run a fairly new fleet and again, use their volume advantage (being big and owning/operating many aircraft) by offering tech services to smaller airlines who can't justify the expense of having a large in-house tech. staff, but need the service and pay for it.

These people know their business and run it well.

Don't understand why many of the large US airlines can't figure out how to do the same. They should at the least be combining their tech/maintenance operations. Do not really understand why every airline in the US needs to keep a huge fixed cost in-house tech staff. If the airlines don't merge, they should at least look at combining their maintenance ops.

Contrary to many competitors,LH is a truely global carrier (except Australia ) offering much used transfer services through FRA and MUC. (..and increasinglythrough Zurich as well..) Many clients travel from US or South-America onwards to Asia or other European/Middle East destinations on the same carrier with the same quality of service.True is LH have rarely been spear-heading entertainment trends on their aircraft ,but that's not their key-selling point anyhow.
I's say their main ,top selling point is very efficient overall systems-reliability paired with fair price-performance ratio.
The technical expertise of "LH technics" does further improve their positive immage -the largest VIP Flagships will mostly be modified in Hamburg for a good reason.

Germany is booming for some years now, they have a solid management, a fine balanced fleet and the most important Star Alliance hubs in Europe.
And most importantly: they fly the economical A346 rather than the gas-guzzling 773..

Quoting Keesje (Reply 4):Because they have a good grip on their home market.

I don't agree on that Keesje. They have competition from Air Berlin and/or Germanwings on practically all domestic routes.

There's still a long way to go before all the alliances deserve a star...

Quoting PlaneInsomniac (Reply 5):- Do not underestimate the advantage they have by being the largest and only comprehensive German-language carrier. This is certainly a factor in the travel planning of many Germans, who may not feel comfortable using an airline which does not (or only partially) provide German-language service.

Exactly. This is the first thing that came to mind when I read the title of the post. Germans are very 'german' and so they make their travel choices that way.

It is no wonder to me that most Lufthansa flights to Miami are full of GERMANS, and why American Airlines cant fly to Germany out of Miami because it wont fill its plane with Germans.

"Like all great travelers, I have seen more than I remember, and remember more than I have seen."

Quoting MIA (Reply 11):Exactly. This is the first thing that came to mind when I read the title of the post. Germans are very 'german' and so they make their travel choices that way.

And so are the French chosing Air France, the Spanish flying Iberia, the Portuguese flying TAP, and the Americans prefering AA, UA, DL, US or whatever, no?

It surely helps, that Germany provides LH with a lot travellers paying premium fares. Nevertheless, I suppose smart fleet planning, competing on service rather than too low fares, professional, long term focused management and, yes, I have to agree to user Glareskin, the A346 helps LH greatly, compared to the inefficent T7 models, to achieve succesful business.

In addition, with LHT as maintenance arm, and several other sub-divisions providing uncyclical revenues (like insurance, consulting, ...) they have a bit of an offset agains weak years in pax-revenues.

Lufthansa is considered a synonym to quality.
Very high technical quality is considered to mean to be as safe as possible within economic reasons.
A consistent service product adds to this. Nothing fancy, maybe slightly old fashioned - but that is what we all want.
They stick with a reasonable price. If a competitor opens a route and they cannot compete there, they pull out ( and try to cooperate ).
They have a friendly cooperative attitude even to the biggest competitor. When AF has a problem somewhere on this globe and LH can help faster, they do, and vice versa. They don't want to kill their competitor.
This does not mean that there is no competition. If you are price sensitive and do not mind an additional stop, it is most of the time cheaper to fly from FRA to AMS, LON or CDG and to continue from there than using LH, and many Germans do so - but - just looked out of the window - AFFRA-CDG is an A318.
There is not much high frequency flying with regional jets inside Germany. Regional jets connect some smaller airports to FRA or MUC two to three times a day to feed the long range and are used in between for connections that have better yields - over the Alps or over the North Sea.
Most short range traffic in Germany is done by high frequency high speed trains.

Because like AF and BA, they are the dominant player in their nation and control a large number of slots to one of the most desirable airports in the world. Also, the original EU is a great transit point between Africa/SE Asia/SE Europe and the Eastern USA.

Millions of passengers perceive LH to be a high-quality airline and are willing to pay the prices they charge, and that is one heck of a compliment worth its weight in gold. LH knows this.

LH is also self-confident enough to do what they think is best for the company, which is why, for instance, they have delayed introducing PTVs in Y until they felt sure that PTVs will "pay off" as it will be one more reason for continued customer loyalty and not just be an unnecessary cost.

I'm Scandinavian, but I no longer perceive SAS to be the high-quality carrier is once was perceived to be... surly FAs, zero service. I now preferably fly LH when going international and I'm very satisfied with them, even if the fare is higher on LH. LH's strategy works!

Quoting Panais (Reply 8):They treat their planes as they treat their cars.

They have an excellent technical team that knows how to take care of their planes.

I remember an aircraft engineer back in the early 90's telling me that LH planes are known in the industry for being very well maintained. The exact quote was ' if you buy a 2nd hand aircraft from Lufthansa, it is almost the same as buying a brand new one from Boeing. (remember the time period, Airbus weren't as big then). The quote has stuck with me and while it doesn't explain your question fully, gives a view into LH and how they are viewed by others in the industry.

Someone mentioned the good hedging policy of LH on fuel.
A friend of mine who is a LH A300 captain, told me that the price they pay on fuel
should stay the same, regardless of market fluctuation, till Oct 08
Then there will be increase relevant to the subsequent hedging contracts, done in periods when fuel was already more expensive, which inevitably will reflect on fares.

Not sure if I have understood well his point, since I am not an expert.
But it makes sense.

Quoting CRJ900 (Reply 16):Millions of passengers perceive LH to be a high-quality airline and are willing to pay the prices they charge, and that is one heck of a compliment worth its weight in gold. LH knows this.

LH is also self-confident enough to do what they think is best for the company, which is why, for instance, they have delayed introducing PTVs in Y until they felt sure that PTVs will "pay off" as it will be one more reason for continued customer loyalty and not just be an unnecessary cost.

I don't thinks LH is as good quality as you seem to pretend. I do a lot of business and leisure trips out of Vienna and I would try to avoid LH for many reasons.

Travelling in Europe, I choose OS or BA. Fares are generally lower than those of LH and the inflight service is better. I

Travelling Intercontinental, I defenitely go BA or AF. Better inflight service and PTV. With BA you have the choice of WTP.

I live unfortunately for me (regarding air travel) for me in the south of Sweden. I prefer LH over SAS due to the fact that the service on LH is much better and that LH is more on schedule than SAS and the last reason SAS strikes more often.

I travel twice a year to both FRA-BLR and FRA-GRU (sometimes ZRH-GRU with Swiss), there is hardly any delay worth mentioning.

I must say that i prefere SWISS on the flight to GRU as they have business seating 2+2+2 instead of LH 2+3+2.

Quoting AIR MALTA (Reply 20):I do a lot of business and leisure trips out of Vienna and I would try to avoid LH for many reasons.

I do the same, about 60 flights a year average. On shorthaul, I like OS as the catering is quite nice in Y. Due to M&M, all my long hauls are on *A carriers, 90% on LH. PTV might be an add on, but then I am not addicted to watching TV, so thats no reason fof me not to be on LH.

My experience on BA to HKG and MNL 10 years ago made me decide to avoid this airline in the future and so far I havent been seen on BA again.

My impressions of LHR and CDG havent been good either, and even if FRA is a mess most of the times, with MUC as an alternative and MUC and FRA only 1 hour away from VIE, thats just the best choice.

I exchanged political frustration with sexual boredom. better spoil a girl than the world